W&M Corporation, a C Corporation, elected S corporation status two years ago. On the first day of the S election, W&M owned an asset with a $20,000 FMV and basis of $10,000. During the current tax year, W&M sold this equipment for $25,000. Assume no other gains or losses from W&M during the current tax year.

This is a two-part question.

Question 1: What amount of built-in gains tax will W&M Corporation have to pay due to the sale?

Question 2: What total amount of gains will W&M Corporation pass through to its shareholders due to the sale?

a) $2,100; $12,900

b) $3,150; $12,900

c) $3,150; $15,000

d) $2,100; $15,000